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Bursting of bubbles hit productivity, says McKinsey

Philip Aldrick, Economics Editor

February 21 2018, 12:01am, The Times

Companies have lost the easy the gains from restructuring to exploit the computing revolution and globalisationDOMINIC LIPINSKI/PA

The collapse in productivity in advanced countries over the past decade was caused by pre-crisis bubbles in financial services and housing and a sharp drop in wages after the recession, according to McKinsey Global Institute.

The consulting company, which spent a year examining evidence from seven advanced nations where productivity has been weak, also blamed digital disruption and an end to easy gains from globalisation. However, it said that advances in the digital economy should herald a sharp improvement in productivity in future.

Britain was among the countries it investigated, along with the United States, Sweden, Germany, France, Italy and Spain. Comparing the period from 2000 to 2004 with that of 2010 to 2014, McKinsey found that America had suffered the sharpest slowdown in growth…